Construction contractors are already walking up to 20% to compensate for potential rates, a movement that could also increase the prices of new condominiums and homes, according to the CEO of developers related to the group.
President Donald Trump has imposed 25% tariffs on certain assets of Canada and Mexico, including steel and aluminum, and is expected to follow the largest rates from April 2. Even before these broader levies have effect, uncertainty on tariffs and inflation is causing many contractors to raise the costs of the real estate project.
The CEO of the related group, Jon Paul Pérez, said that contractors offered by seven projects that have prices in process.
“We are seeing [subcontractors] He launches an additional cushion to his numbers anticipating tariffs, “Pérez told CNBC during a live wealth conversation.
Pérez said the price increases are driven by the anticipation of higher costs, instead of current levels, and pointed out that it is not clear how the highest costs will be divided between the contractor and the developer.
“When you go through their numbers in detail and start negotiating, you quickly discover that they are a bit padded to protect themselves,” he said.
As a result, tariff fears could add a more upward price pressure on a real estate market that is already paralyzed by high prices and high mortgage rates. According to a survey by the National Association of Housing Builders, the increase in prices for construction materials could add $ 9,200 to the cost of a typical house.
Related Group is one of the largest and most prominent developers in the United States, which covers affordable homes to luxury condominium buildings, mainly in southern Florida. Currently, the company has more than 90 projects at some stage of development, including rentals, affordable housing units, mixed use developments and luxury condominiums.
The founder and president of Relation, Jorge Pérez, said that, in addition to tariff concerns, the repression of the Trump administration on immigration could also increase developments prices, since the construction industry depends largely on abroad workers.
“There will be absolutely a cost effect in our industry, particularly on the construction industry,” he said. “Losing these people will have an inflationary effect.”
For now, Relation said that the high range of the real estate market is still strong, especially in Florida. The company sold two condominium penthouses in its new exclusive development in Fisher Island, near South Beach, Miami, for a total of $ 150 million.
Related is also building a condominium tower in front of the luxury sea in Bal Harbor, Miami, called Rivage Residences Bal Harbor, which offers a mega-miguion in the sky, combining two penthouses that could add more than 20,000 square feet and obtain more than $ 150 million.
“The high -end buyer is a very particular buyer,” said Jorge Pérez. “These people buy more than $ 10 million of condominiums and, in general, they are very rich. Therefore, they are less affected, we are not seeing a decrease in that market.”
President Pérez said that the “average market”, or those who buy condominiums in the range of $ 1 million to $ 3 million, are taking a more anticipated approach and see the uncertainties around tariffs and immigration. Many condominium buyers in Miami and southern Florida are from Canada and Latin America, and therefore are more sensitive to possible changes in immigration policy.
“The South Americans come and say: ‘What will happen to immigration policies?’ Or, ‘I’m going to lose my visa?’ “, Said. “We had a project in which we lost seven or eight Canadian and Mexican buyers who were ready to sign contracts, but when all these things came from rates, they didn’t want to buy. But I think that will calm down.”
